Indian goods valued at over $10 billion are reaching Pakistan annually via third-country trade routes, according to estimates by the Global Trade Research Initiative (GTRI).
In a note issued in the aftermath of the April 22 terror attack in Pahalgam, GTRI highlighted that certain firms have been utilising ports such as Dubai, Singapore, and Colombo to facilitate the movement of Indian goods into Pakistan, circumventing trade restrictions imposed in recent years.
“GTRI estimates India's Goods worth over USD 10 billion reach Pakistan via this route, annually,” the note stated.
Explaining the process employed by exporters, GTRI detailed that goods are first dispatched to intermediary ports, where independent firms offload them into bonded warehouses — designated storage areas where goods can be kept without paying duties whilst in transit.
“In the bonded warehouse, the labels and documents are modified to show a different country of origin. For example, Indian-made goods may be relabelled as ‘Made in UAE’. After this change, they are shipped to countries like Pakistan, where direct trade with India is not allowed,” the note elaborated.
This method allows firms to bypass direct India-Pakistan trade barriers, enabling them to sell goods at inflated prices through third countries and avoid governmental scrutiny, as the trade appears to originate from a neutral port.
As an illustration, the GTRI note pointed out: a firm might export auto parts from India to Dubai valued at $100,000. Post-relabelling as UAE-manufactured products, these are then shipped to Pakistan for $130,000 — the elevated price covering warehouse costs, additional documentation, and premium market access.
“While this transshipment model isn't always illegal, it sits in a grey zone. It shows how businesses find creative ways to keep trade going--often faster than governments can react,” the GTRI observed.
The revelations come at a time of heightened diplomatic tension between India and Pakistan following the terror attack in Pahalgam, which claimed 26 lives. In response, India has closed the Integrated Check Post at Attari, suspended the SAARC Visa Exemption Scheme for Pakistani nationals and ordered a reduction in diplomatic personnel at High Commissions in both countries.
Additionally, India has halted its participation in the Indus Waters Treaty, an accord signed in 1960, signalling a significant hardening of its diplomatic stance.
Also read: 171 million Indians lifted out of poverty in 10 years: WB
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